Why the Financial Industry is so Corrupt

[georgephillip]

Those on the receiving end of the economic surplus (surplus value) generated in production are constantly seeking to enlarge their profits and wealth through new investment and further augmentation of their capital (society’s productive capacity). But this inevitably runs up against the relative deprivation of the underlying population, which is the inverse of this growing surplus.

can i "call", and cry foul?

Yes, business accumulate profits; and then seek to re-invest those savings, on more profitable investments. The recirculation, of savings into investments (S --> I), is the "heart" of the economy.

But, businesses re-investing, in their own society's economy, generates jobs today for workers building the capital (machines, factories) that they purchase today; and keeps on generating jobs tomorrow for other workers employing that capital (working with the machines, at the factories) in perpetual pursuit of profits. Which are then, themselves, re-invested into society, improving the economy.

Businesses investing billions and trillions of dollars, in their own societies & economies, is not "bad"; is "good"; or, at least, "better than nothing", i.e. recession. Thus, the lack, want, and dirth of business (re-)investment, into the US economy today, is the cause, of the current recession. Constant "harassment" of markets & businesses, by government "meddling", is not helping; is hindering; economic recovery.

Businesses re-investing in society and the economy is not "bad" for workers, hired to build machines, factories; and then hired again to work on those machines, at those factories, building "widgets" for sale. Workers are not "deprived" by businesses investing billions & trillions of dollars, in those workers' society & economy.

If disputing the Decrees of mainstream media is possible, then i want to dispute, that businesses (re-)investing billions & trillions of dollars per year into a society & economy, is "bad" for that society & economy.

What happens when businesses get better returns on their investments outside their own society's economy? US jobs are outsourced to low-wage states to build machines and factories that provide jobs producing goods that many US workers can no longer afford to purchase.

Most Marxists agree that capitalism can be divided into three stages: mercantilism which existed between the 16th-18th centuries, competitive capitalism which dominated until the last 25 years of the 19th century, and monopoly capitalism or corporate capitalism which has been marked by "spiraling concentration and centralization of capital...the rise...of the corporate form of business organization, along with the creation of a market for industrial securities."

Today, US corporations are hoarding trillions of dollars instead of investing because the middle class in the US can no longer afford to drive 70% of their GDP. Government's "meddling" is primarily due to tax and trade policies that have enabled the greatest transfer of wealth in all history over the past quarter of a century.

Monopoly-Finance Capital and the Paradox of Accumulation :: Monthly Review

 

[EdwardBaiamonte]

why so corrupt?

because its so regulated

 

[georgephillip]

Too much regulation....

"On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman's bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron"

Case Study: The Collapse of Lehman Brothers

 

[EdwardBaiamonte]

Too much regulation....

"On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman's bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron"

Case Study: The Collapse of Lehman Brothers

do you have any idea what your point is?????????????????

 

[georgephillip]

"While the firm prospered over the following decades as the U.S. economy grew into an international powerhouse, Lehman had to contend with plenty of challenges over the years. Lehman survived them all – the railroad bankruptcies of the 1800s, the Great Depression of the 1930s, two world wars, a capital shortage when it was spun off by American Express in 1994, and the Long Term Capital Management collapse and Russian debt default of 1998. However, despite its ability to survive past disasters, the collapse of the U.S. housing market ultimately brought Lehman Brothers to its knees, as its headlong rush into the subprime mortgage market proved to be a disastrous step.

Case Study: The Collapse of Lehman Brothers

Is your point the collapse of the US housing market stemmed from too much regulation?

 

[JimBowie1958]

Those on the receiving end of the economic surplus (surplus value) generated in production are constantly seeking to enlarge their profits and wealth through new investment and further augmentation of their capital (society’s productive capacity). But this inevitably runs up against the relative deprivation of the underlying population, which is the inverse of this growing surplus.

can i "call", and cry foul?

Yes, business accumulate profits; and then seek to re-invest those savings, on more profitable investments. The recirculation, of savings into investments (S --> I), is the "heart" of the economy.

But, businesses re-investing, in their own society's economy, generates jobs today for workers building the capital (machines, factories) that they purchase today; and keeps on generating jobs tomorrow for other workers employing that capital (working with the machines, at the factories) in perpetual pursuit of profits. Which are then, themselves, re-invested into society, improving the economy.

Businesses investing billions and trillions of dollars, in their own societies & economies, is not "bad"; is "good"; or, at least, "better than nothing", i.e. recession. Thus, the lack, want, and dirth of business (re-)investment, into the US economy today, is the cause, of the current recession. Constant "harassment" of markets & businesses, by government "meddling", is not helping; is hindering; economic recovery.

Businesses re-investing in society and the economy is not "bad" for workers, hired to build machines, factories; and then hired again to work on those machines, at those factories, building "widgets" for sale. Workers are not "deprived" by businesses investing billions & trillions of dollars, in those workers' society & economy.

If disputing the Decrees of mainstream media is possible, then i want to dispute, that businesses (re-)investing billions & trillions of dollars per year into a society & economy, is "bad" for that society & economy.

Except with free trade as we now practice it, the corporations invest in the society of OTHER countries and leave the middle class to wait for wage scales to collapse to subsistence levels before they even look at these shores again.

 

[Sallow]

Just goes to show how money corrupts.

Basically..it's always a bad idea to put the foxes in charge of the chicken coup.

 

[EdwardBaiamonte]

Except with free trade as we now practice it, the corporations invest in the society of OTHER countries

how is gifting to us low prices so we can buy more things investing in other societies??

If GM made cars in the most expensive labor market in the world and sold us the highest priced cars would that be investing in our society??

If someone took your dollar and gave you two would that be investing in another society?? Thats what our saintly companies do for us when they search the world for low wages. That explains why almost all economists suppoprt free trade..

 

[JimBowie1958]

Except with free trade as we now practice it, the corporations invest in the society of OTHER countries

how is gifting to us low prices so we can buy more things investing in other societies??

Because we are moving jobs to those countries so they can 'gift' us with higher national trade debt and higher unemployment. This isnt rocket science.

If GM made cars in the most expensive labor market in the world and sold us the highest priced cars would that be investing in our society??

Do you have to start with the most extreme cases to make your point? Sounds like you dont have much to back up your assertion if so.

The problem with GM has been bad management, not too high labor costs. Ford and BMW managed to compete and keep ahead of the pack with better technology, quality control and automation. They got leaner and those laid off by both companies got good severance packages and assistance to transitioning to new jobs.

When whole industries move over seas EVERYTHING is lost.

If we keep exporting jobs and national debt, who would be able to buy cars at all if this continues?

If someone took your dollar and gave you two would that be investing in another society?? Thats what our saintly companies do for us when they search the world for low wages. That explains why almost all economists suppoprt free trade..

'Saintly companies', lol.

Thanks for that laugh as I think of LIBOR, Enron, and other collosal thefts and corruption.

 

[Widdekind]

What happens when businesses get better returns on their investments outside their own society's economy? US jobs are outsourced to low-wage states to build machines and factories that provide jobs producing goods that many US workers can no longer afford to purchase.

Except with free trade as we now practice it, the corporations invest in the society of OTHER countries and leave the middle class to wait for wage scales to collapse to subsistence levels before they even look at these shores again.

So, everybody agrees that investment in an economy benefits that economy. And so, Americans should want to re-attract investment into their US economy. Driving US businesses abroad, with high wages & taxes, helps other foreign economies; comparatively hindering the US economy. How could investment be re-attracted into the US economy?

eliminating minimum wages would re-legalize millions of low-pay jobs. All of that extra employment could attract extra investment

 

[JimBowie1958]

What happens when businesses get better returns on their investments outside their own society's economy? US jobs are outsourced to low-wage states to build machines and factories that provide jobs producing goods that many US workers can no longer afford to purchase.

Except with free trade as we now practice it, the corporations invest in the society of OTHER countries and leave the middle class to wait for wage scales to collapse to subsistence levels before they even look at these shores again.

So, everybody agrees that investment in an economy benefits that economy. And so, Americans should want to re-attract investment into their US economy. Driving US businesses abroad, with high wages & taxes, helps other foreign economies; comparatively hindering the US economy. How could investment be re-attracted into the US economy?

eliminating minimum wages would re-legalize millions of low-pay jobs. All of that extra employment could attract extra investment

Widekind, define 'US economy' then define what is best for it.

If you define the US economy in terms of GDP and corporate profit instead of job creation and availability and the average individual income, then we disagree on defenition of 'US economy'.

If you define what is best for this economy by looking at improvements in Wall street DJI or increased GDP then we disagree also as an increase in averages does not imply an increase in mean.

The truly freest markets have regaulations designed for a desired outcome and are thus fair and avoid fraud. Since the implmentation of NAFTA and other free trade treaties and policies the corruption and irresponsibility of Wall Street has only increased, and thus has harmed the true freedom of the markets.

 

[Widdekind]

Widekind, define 'US economy' then define what is best for it.

If you define the US economy in terms of GDP and corporate profit instead of job creation and availability and the average individual income, then we disagree on defenition of 'US economy'.

If you define what is best for this economy by looking at improvements in Wall street DJI or increased GDP then we disagree also as an increase in averages does not imply an increase in mean.

perhaps you could define "US economy" ?

Inexpertly, the US economy is gauged by statistics including GDP, and the DJI, which also reflects corporate profits, which are part of (and derive from) GDP. More production (GDP), more sales revenues & employment, more profits, higher DJI.

you have a superior idea?

 

[georgephillip]

What happens when businesses get better returns on their investments outside their own society's economy? US jobs are outsourced to low-wage states to build machines and factories that provide jobs producing goods that many US workers can no longer afford to purchase.

Except with free trade as we now practice it, the corporations invest in the society of OTHER countries and leave the middle class to wait for wage scales to collapse to subsistence levels before they even look at these shores again.

So, everybody agrees that investment in an economy benefits that economy. And so, Americans should want to re-attract investment into their US economy. Driving US businesses abroad, with high wages & taxes, helps other foreign economies; comparatively hindering the US economy. How could investment be re-attracted into the US economy?

eliminating minimum wages would re-legalize millions of low-pay jobs. All of that extra employment could attract extra investment

US businesses are paying taxes (when they even bother) at a much lower rate than they did fifty years ago when, not coincidentally, the gap between rich Americans and the majority of workers was much narrower than it is today.

FWIW, I think attracting investment back into the US requires re-thinking the top-down corporate model of business itself; worker owned cooperatives modeled on Mondragon, for example, have shown they can compete effectively with traditional corporations.

US Labor does not currently share in any of the corporatons' decision making even though, from a democratic standpoint, labor contains the largest number of total participants. Why should US workers be required to check their democracy at the workplace door?

Look at the difference between German labor unions and their US counterparts of forty years ago.
German unions had voting members sitting on the boards of directors of the corps they worked for.
When US capital began outsourcing labor to China, German capital was voted down in the boardroom.

It could happen here.

 

[Widdekind]

US Labor does not currently share in any of the corporatons' decision making even though, from a democratic standpoint, labor contains the largest number of total participants. Why should US workers be required to check their democracy at the workplace door?

nothing prevents US workers from lawfully buying up the companies they work for. A few thousand workers, saving income for a few years, to buy a big bloc of stock, would be able to become important stakeholders, in their own companies. (i do not know why labor organizations, who have had over a hundred years to do so, have never directed their dues, towards stock purchases.)

 

[expat_panama]

...if it wasn't for lies, capitalists would have little to say...

Your clarity is welcome, THANKS!

I personally disagree with the idea that wealth creators are bad, but clarity is always better than mere vague agreement.

 

[georgephillip]

Good or bad, the "wealth creators" are definitely winning?

"We hear a lot of fulminations about the menace of redistribution and the threat to 'wealth creators.'

"It's worth remembering that the wealthiest have been winning the distributional fights.

"Worth remembering too that the promise implied by the phrase 'American dream' was not that a lucky few would gain staggering success, but that the broad many could, with reasonable effort, gain comfort and security: the 'best poor man's country in the world' in an 18th century phrase."

The "Wealth Creators" Are Winning - The Daily Beast

What does the "American Dream" mean to you?

 

[EdwardBaiamonte]

how is gifting to us low prices so we can buy more things investing in other societies??

Because we are moving jobs to those countries so they can 'gift' us with higher national trade debt and higher unemployment. This isnt rocket science.

Dear, if someone from Europe offers you a Porsche for $5000 or someone from CA offers you a Toyota for $2000 why is that bad when it gives you the ability to buy a car plus a whole lot more!!!
Do you want companies to offer you the highest or lowest prices in the world.

North Korea allows no trade and so no one can afford anything because its all made locally!! THe more you trade the richer you get!!

 

[EdwardBaiamonte]

Is your point the collapse of the US housing market stemmed from too much regulation?

yes of course!! The entire federal government was organized to regulate the free market to get people into homes the unregulated free market said they could not afford!!

Did you think they created Fan Fred so fewer people could buy homes??? See why we are positive a liberal will be slow?

 

[EdwardBaiamonte]

The problem with GM has been bad management, not too high labor costs.

too stupid!!! Auto companies from all over the world locate in America, but in right to work states where there are no grotesque unions. Imagine the employment we'd have if there was no threat from grotesque unions anywhere in America. Imagine the upward pressure on wages with all those new jobs!!

See why we are 100% positive a liberal will be slow??

 

[georgephillip]

US Labor does not currently share in any of the corporatons' decision making even though, from a democratic standpoint, labor contains the largest number of total participants. Why should US workers be required to check their democracy at the workplace door?

nothing prevents US workers from lawfully buying up the companies they work for. A few thousand workers, saving income for a few years, to buy a big bloc of stock, would be able to become important stakeholders, in their own companies. (i do not know why labor organizations, who have had over a hundred years to do so, have never directed their dues, towards stock purchases.)

Maybe for the same reasons that US labor unions never pushed for voting members sitting on the boards of directors of the corporations they worked for? During the "golden years" of union influence in this country, the leaders of the biggest unions were staunchly anti-communist. Possibly the notion of workers buying a stake in the companies that employed them sounded vaguely collectivist to the corrupt, rich, white businessmen who ran the biggest unions.

Gar Alperovitz has done some research into what can go wrong when workers try to purchase their workplace:

"IN 1977, I worked with a Youngstown, Ohio-based coalition of religious leaders, including Catholic Bishop James W. Malone. I was called to help them when the first major steel collapse in the U.S. occurred.

"Five thousand people lost their jobs in one day when Youngstown Sheet and Tube closed down. Today, that’s not news, but in 1977 it was a gigantic story because it was the first big steel closing. Bishop Malone called together an ecumenical coalition, saying, 'This city will decay if we can’t bring our industry back.'

"One steel worker suggested, 'Why don’t we take over this mill and put it to work, and why don’t we do our politics in support of that?'

"That sounded crazy at the time, but in fact, they really did their homework.

"They persuaded the Carter administration to finance very sophisticated studies, then came forward with plans—the kind of plans that are now found in many modern steel mills.

"They also got the administration to promise $100 million in loan guarantees.

"They secured support from every major politician in the state of Ohio, including the conservative Gov. James Rhodes. They were ready to move forward with a serious plan. Alongside this they had a second, very sophisticated idea, one critical to the new economy movement.

"They said, 'Even if we fail, we may put forward an idea that may help other people who might try to do this in other situations.' As a result they put a major emphasis on getting the word out and teaching people about their process and their plan.

"They knew they were injecting an important idea into political consciousness.

"They did fail.

"In 1978, after the election, the Carter administration pulled back the money. Youngstown Sheet and Tube closed, and the city of Youngstown lost a massive amount of its population."

More Bullish Than You Think